By keeping up with your pension fund payments, you can look forward to retiring between the ages of 60 to 65. But what if you have too much debt?
Some people love the work they do so much that retirement is postponed as long as possible. Others, on the other hand, may want to get going on their hobbies full-time sooner rather than later. Unfortunately, debt is often the Grinch standing between you and your dream.
It is possible to retire earlier than you think and be debt-free, but you have to start planning for it in well in advance.
1. Cut spending
First off, consult your budget and try to find more ways to save. Remember, several smaller cut backs of R100 each for example, are easier to do but just as effective. Whatever you are able to save monthly, use it to pay off debt.
Important: Tackle one account at a time until it is paid off. Then attack the next account. With the previous account paid off, you’ll have extra funds (the monthly instalment you use to pay) to contribute too.
2. Earn more
Try to earn more now. Take up more responsibility at work, apply for that promotion or if you are stuck in a rut, perhaps it is time to change jobs. Alternatively, you can also make extra money after hours through a hobby or talent you are good at. Be resourceful. Use extra funds to pay off debt.
3. Don’t make new debt
Don’t make any new debt. Your emergency fund has to cover all your unforeseen expenses. Making new debt while you have a plan in place to crush your current debt is like taking two steps back. Don’t do it. Stay on track!
4. Pay off debt with any extra cash that comes your way
Do you get a tax refund every year? Use it to pay off debt. Cleaned out the garage and made some money selling stuff you aren’t using anymore? Use it to pay off debt. Or made a once-off commission on a deal you helped close? Use it to pay off debt.
Yes, it is very tempting to use random cash like this on a holiday or to renovate your home. But if you have a lot of debt you are in a lot of trouble and tackling it should be one of your main financial obligations.
5. Consider Debt Counselling
If you find yourself too entangled in the debt trap that you cannot see how you will be able to make ends meet now, let alone retire when the times comes – give Debt Rescue a call before it is too late. We can help you formulate a new repayment plan so that debt doesn’t delay retirement or worse, follow you there.